Page 148 - 2023 White Paper on the Business Environment in China
P. 148
3 White Paper on the Business Environment in China
expected to stand at 37.5 percent in 2022, while of cost control, driven by the fact that battery
that for plug-in hybrid electric vehicles to hit now accounts for 30 percent of the total material
20.5 percent. The penetration rate of new NEVs cost. Statistics show that the gross margin of CATL
may surpass 50 percent in the Chinese market in reached 23 percent for the first half of 2021. Since
2026. Consumers believe that the current public 2017, its power battery gross margin has dropped
charging and replacement facilities for NEVs could from 35.3 percent to 23 percent. CATL claimed its
generally meet the demand for short-distance gross profit margin might decline if raw material
urban trips (Xinhua, China’s NEV Market). prices increase due to factors such as intensified
market competition in the future. The expansion
The electric vehicle (EV) industry has been of OEMs into upstream industry is such that
paying closer attention to the core elements of BYD and Great Wall Motor have incorporated
safety, cost, recyclability and sustainability, which their battery affiliates Fudi battery and Svolt,
will be the core factors to determine the scale of respectively. Meanwhile Volkswagen has become
the industry and the status of enterprises. The shift the biggest shareholder of Gotion High-tech Co
in focus dates back a few years when the incipient Ltd, a major battery supplier. Going forward, the
EV makers were compelled to address consumers' battery market will be categorized into battery
concerns about the drawbacks of electric cars. makers backed by auto companies and large
Defects such as a short driving range and bad battery manufacturers (Yang).
performance in a low-temperature environment
pushed EV manufacturers to make improvements, Despite many parts of China still battling COVID-19
but only in areas such as the volume density resurgence, foreign firms' confidence in investing
and energy density of their products. But in in the Chinese NEV market remains undiminished,
more recent times, practitioners have changed thanks in part to the country's thriving economic
their views. Vehicle batteries catch fire more prospects. Government guidelines released in
frequently. From 2020 to 2022, Tesla, GM, XPeng, April 2022 said China supports the development of
NIO had many battery-induced fire accidents. The NEVs, and encourages the development of NEVs in
cars in question are high-performance models rural areas and the construction of NEV supporting
and a battery's performance usually comes at domestically located facilities. Industrial insiders
the expense of safety. Safety is the top concern believe that the favorable policies will further
now. The rising costs of raw materials make EV boost the consumption of NEVs in China. Chinese
battery manufacturing more expensive. The price government's heightened focus on the NEV
of compounds like lithium carbonate has risen industry and its strong support in terms of policies
fivefold, cobalt up 50 percent, and nickel up 30 and funds to the industry are attracting foreign
percent in the last twelve months. And it's hard investment into China's NEV business (Wang).
for battery makers to acquire enough materials:
Lithium and cobalt are unevenly distributed and Autonomous Vehicles
mined worldwide. Primary new energy vehicle
markets such as China, Europe and the United AI could have the greatest potential impact on the
States lack such resources and rely on imports. automotive sector, delivering more than US$380
Growing geopolitical crises are also affecting billion in economic value. This value creation will
supply in radical ways and with increased intensity. likely be generated predominantly in three areas:
Recycling the lithium could offer a way out but the autonomous vehicles, personalized services
industry is yet to set a standard, making the overall for auto owners, and fleet asset management.
collection process inefficient. All these issues are Autonomous vehicles make up the largest portion
galvanizing experts to think comprehensively of value creation in this sector (US$335 billion).
about how to design an EV. Safety, cost, battery Some of this new value is expected to come from a
life and sustainability are the key factors in judging reduction in financial losses, such as medical, first-
whether a car can succeed. All forms of subsidies, responder, and vehicle costs. Roadway accidents
cash or not, encourage consumers to buy EVs and stand to decrease by an estimated 3 to 5 percent
amplify competition among OEMs. OEMs are very annually as autonomous vehicles actively navigate
likely to integrate upstream to address the issue
148
expected to stand at 37.5 percent in 2022, while of cost control, driven by the fact that battery
that for plug-in hybrid electric vehicles to hit now accounts for 30 percent of the total material
20.5 percent. The penetration rate of new NEVs cost. Statistics show that the gross margin of CATL
may surpass 50 percent in the Chinese market in reached 23 percent for the first half of 2021. Since
2026. Consumers believe that the current public 2017, its power battery gross margin has dropped
charging and replacement facilities for NEVs could from 35.3 percent to 23 percent. CATL claimed its
generally meet the demand for short-distance gross profit margin might decline if raw material
urban trips (Xinhua, China’s NEV Market). prices increase due to factors such as intensified
market competition in the future. The expansion
The electric vehicle (EV) industry has been of OEMs into upstream industry is such that
paying closer attention to the core elements of BYD and Great Wall Motor have incorporated
safety, cost, recyclability and sustainability, which their battery affiliates Fudi battery and Svolt,
will be the core factors to determine the scale of respectively. Meanwhile Volkswagen has become
the industry and the status of enterprises. The shift the biggest shareholder of Gotion High-tech Co
in focus dates back a few years when the incipient Ltd, a major battery supplier. Going forward, the
EV makers were compelled to address consumers' battery market will be categorized into battery
concerns about the drawbacks of electric cars. makers backed by auto companies and large
Defects such as a short driving range and bad battery manufacturers (Yang).
performance in a low-temperature environment
pushed EV manufacturers to make improvements, Despite many parts of China still battling COVID-19
but only in areas such as the volume density resurgence, foreign firms' confidence in investing
and energy density of their products. But in in the Chinese NEV market remains undiminished,
more recent times, practitioners have changed thanks in part to the country's thriving economic
their views. Vehicle batteries catch fire more prospects. Government guidelines released in
frequently. From 2020 to 2022, Tesla, GM, XPeng, April 2022 said China supports the development of
NIO had many battery-induced fire accidents. The NEVs, and encourages the development of NEVs in
cars in question are high-performance models rural areas and the construction of NEV supporting
and a battery's performance usually comes at domestically located facilities. Industrial insiders
the expense of safety. Safety is the top concern believe that the favorable policies will further
now. The rising costs of raw materials make EV boost the consumption of NEVs in China. Chinese
battery manufacturing more expensive. The price government's heightened focus on the NEV
of compounds like lithium carbonate has risen industry and its strong support in terms of policies
fivefold, cobalt up 50 percent, and nickel up 30 and funds to the industry are attracting foreign
percent in the last twelve months. And it's hard investment into China's NEV business (Wang).
for battery makers to acquire enough materials:
Lithium and cobalt are unevenly distributed and Autonomous Vehicles
mined worldwide. Primary new energy vehicle
markets such as China, Europe and the United AI could have the greatest potential impact on the
States lack such resources and rely on imports. automotive sector, delivering more than US$380
Growing geopolitical crises are also affecting billion in economic value. This value creation will
supply in radical ways and with increased intensity. likely be generated predominantly in three areas:
Recycling the lithium could offer a way out but the autonomous vehicles, personalized services
industry is yet to set a standard, making the overall for auto owners, and fleet asset management.
collection process inefficient. All these issues are Autonomous vehicles make up the largest portion
galvanizing experts to think comprehensively of value creation in this sector (US$335 billion).
about how to design an EV. Safety, cost, battery Some of this new value is expected to come from a
life and sustainability are the key factors in judging reduction in financial losses, such as medical, first-
whether a car can succeed. All forms of subsidies, responder, and vehicle costs. Roadway accidents
cash or not, encourage consumers to buy EVs and stand to decrease by an estimated 3 to 5 percent
amplify competition among OEMs. OEMs are very annually as autonomous vehicles actively navigate
likely to integrate upstream to address the issue
148
